Utility Begins Plans to Shut Down Carbon Coal Plant

January 8, 2013 — State regulators are allowing Rocky Mountain Power to establish an account to track expenses associated with the utility’s plan to shut down a Utah coal plant by 2020. The decision does not immediately impact customer rates.

According to Rocky Mountain Power, the 172-megawatt Carbon coal plant cannot economically be retrofitted to comply with the Environmental Protection Agency’s new mercury and air toxics standards (MATS). The plant’s location at the mouth of the narrow Castle Gate Canyon in eastern Utah makes it difficult to install the scrubbers, baghouses and other emissions control equipment needed to meet EPA requirements.

The Idaho Public Utilities Commission granted the company’s request to transfer the plant’s remaining balance and accumulated depreciation into a deferred account and establish a regulatory asset to recover costs after the plant is retired in 2015 and through final decommissioning in 2020.  Idaho’s share in the amount to be recovered from customers will be based on the amount of generation allocated to Idaho a calendar year before the date the plant is removed from service.  The impact on customer rates will be minimal, the company maintains, because the expense will be spread over the remaining depreciable life of the plant through 2020.

Rocky Mountain estimates the cost of decommissioning the plant will be about $57 million. The net book value of the plant is $55 million with an anticipated annual depreciation expense of about $3.7 million.  Utilities are allowed to include depreciation expense in retail rates to help cover the cost to replace facilities.

In addition to MATS compliance, Rocky Mountain anticipated the plant may not be able to meet National Ambient Air Quality Standards and long-term Regional Haze planning requirements.  Rocky Mountain considered converting the coal plant into a natural gas plant, but said the conversion would not achieve an acceptable emissions profile in the long term.

In a separate case (PAC-E-12-07, Order No. 32691), the commission recently approved Rocky Mountain Power’s application to record expenses associated with costs to meet emission requirements at its 330-MW Naughton Unit 3 plant near Kemmerer, Wyo.

Rocky Mountain claims it has spent nearly $8 million in environmental compliance expense.  Idaho’s share is expected to be about $479,000. The company will not seek recovery of those expenses until its next rate case and proposes to spread the expenses over a number of years. Commission staff will evaluate the expenses at that time to determine if they were prudently incurred.

Naughton Unit 3 is a thermal steam generation unit that began operations in 1971. It is one of three coal-fired generation units owned by the company.

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